This paper examines how established firms use their core competences to diversify their business by exploring and ultimately developing green technologies. In contrast to start-ups dedicated to a green mission, diversifying into green markets by developing new products based on existing core competences has proven to be challenging. This is because the exploration processes to find a match between green technology opportunities and internal competences is complex and new to most established firms. This paper gains insights into exploration processes for green technologies and the learning modes and outcomes linked to these processes. We examined exploration processes at the microlevel in an embedded case study of an engineering firm using a combination of the "fireworks" innovation process model and organizational learning theory. First, we found that developing green technologies involves a long-term exploratory process without guarantee of (quick) success and likely involves many exploration failures. Second, as exploration unfolds along multiple technology trajectories, learning occurs in individual exploration paths (on-path), when new paths are pursued (path-initiation), and when knowledge from one path is spilled over to subsequent paths (across-paths). Third, to increase their chances for success, firms can increase the efficiency of exploration by fostering a failure-friendly organizational culture, deliberately experimenting, and purposefully learning from failures.
Keywords: core competences; eco‐innovation; green innovation; green technology; innovation process; organizational failure; radical innovation; sustainability‐oriented innovation.
© 2019 The Authors Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.